Britain stripped of AAA status by ratings agency following Brexit

STANDARD and Poor's was the last agency to keep the UK on a AAA rating

By lauren fruen

27th June 2016, 10:36 pm

Updated: 27th June 2016, 11:03 pm

RATINGS agency Standard and Poor's tonight stripped Britain of its top credit rating – as its rival Fitch further downgraded.

S&P said the referendum result could trigger "a deterioration of the UK's economic performance, including its large financial services sector".

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Ratings agency Standard and Poor's has stripped the UK of its top AAA credit rating on the day George Osborne spoke on the state of Britain's economy

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It marks the loss of the last remaining AAA rating and is a fresh blow to The City following Brexit

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The pound at 5pm was 1.3216 dollars compared to 1.3622 dollars at the previous close

It was a fresh blow to the UK economy this evening after Sterling fell to a 31-year low against the dollar and the country's stock markets plunged.

A statement from S&P said: “"In our opinion, this outcome is a seminal event, and will lead to a less predictable, stable, and effective policy framework in the UK.”

A credit rating can affect how much it costs the government to borrow money.

S&P added: "The negative outlook reflects the risk to economic prospects, fiscal and external performance, and the role of sterling as a reserve currency, as well as risks to the constitutional and economic integrity of the UK if there is another referendum on Scottish independence.”

What are credit rating agencies and what do they do?

They rate a country on the strength of its economy.
A rating affects how much it costs governments to borrow money in the international financial markets.
The three main credit rating agencies are Moody's, Fitch and Standard & Poor's.
Each agency gives countries around the world a specific credit rating score ranging from top mark of AAA down to the lowest reading of D.
They base their assessment on a range of financial and business factors that may influence a government or company's ability to repay its debt, such as the UK voting to leave the European Union.

It was the last agency to keep the UK on a AAA rating after Moody's cut its rating of the UK on Friday.

Tonight Fitch further downgraded Britain's credit rating and blamed the fallout from the country's vote to leave the European Union.

Fitch downgraded the rating from AA+ to AA and said: "The UK vote to leave the European Union in the referendum on 23 June will have a negative impact on the UK economy, public finances and political continuity.”

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They added: “Fitch believes that uncertainty following the referendum outcome will induce an abrupt slowdown in short-term GDP growth, as businesses defer investment and consider changes to the legal and regulatory environment.

"Medium-term growth will also likely be weaker due to less favourable terms for exports to the EU, lower immigration and a reduction in foreign direct investment.

"An adjustment in the value of sterling and changes in the business environment could also affect growth."

Protecting Britain's credit rating was a top priority of Chancellor George Osborne when he came to power in 2010.

S&P had been the only major ratings agency to maintain a triple-A rating for Britain.

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Fitch and Moody's stripped Britain of their AAA ratings before the referendum campaign began

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London’s FTSE 100 closed down 156.49 points at 5,982.20, a loss of 2.55 per cent

The Chancellor of the Exchequer today insisted the UK economy is ‘strong’ – despite its top stocks tumbling more than 2.5 per cent today.

Sterling also fell to a new 31-year low against the dollar, with £1 worth just $1.314 at one point, before a modest rally.

The markets were sent into shock as the pound tumbled in value after Britain voted to leave the European Union on Thursday.

Friday morning saw the pound at a 31-year low after the monumental decision to break away from the EU.

Chancellor George Osborne said: “I want to reassure the people the country is ready to confront what the future holds from a position of strength.”